Société Générale is the second largest bank in France, behind BNP Paribas, and one of the 10 biggest euro zone banks. Better known as SocGen, its reputation was dented after news that a rogue trader, Jerome Kerviel, had lost it more than the equivalent of US$7 billion. Kerviel was subsequently sentenced to three years in jail, and the bank won a 4.9 billion euro judgement against Kerviel.
Rogue trader Jerome Kerviel loses appeal over jail and €4.9b fine
Paying back money lost by bank will take Jerome Kerviel 370,000 years
An appeal by the man behind France's biggest rogue-trading scandal against a three-year jail term and a €4.9 billion (HK$49 billion) fine was rejected by a court in Paris yesterday.
The court upheld the five-year jail sentence handed down to Jerome Kerviel in 2010, two years of which were suspended, and confirmed he had to pay back the billions his gambles cost the bank Société Générale, which was brought to the brink of collapse by the fraud. Kerviel "was the sole creator, inventor and user of a fraudulent system that caused these damages to Société Générale," the court said in its ruling.
A nervous-looking Kerviel, who chewed his nails as he heard the verdict, was not forced to go to jail immediately. A separate judge will decide the precise terms of his sentence and how many hours he spends behind bars every day, a process that lawyers say could take weeks. Kerviel left quickly without making any comment to the media scrum outside the courtroom. His lawyer, David Koubbi, condemned what he called a "lamentable injustice" and said he may appeal to a higher court.
Société Générale welcomed the ruling. Its lawyer, Jean Veil, said it showed "the full and entire guilt of Mr Jerome Kerviel". Veil added that the bank would be "realistic" as regards getting its lost money back. The sum is equivalent to what Kerviel, currently unemployed, might earn over 370,000 years if he started working for the French minimum wage.
Lawyers for Kerviel, 35, had argued at his appeal hearing in June that he should be acquitted. Denouncing his conviction as a "farce", they insisted the bank knew he was making uncovered bets on futures markets.
But prosecutor Dominique Gaillardot urged the court to make an example of Kerviel, describing him as "perverse and manipulative". Calling for a maximum five-year term, Gaillardot argued: "Your decision will be an example and a deterrent."
Kerviel himself argued during the appeal that he was not responsible for the huge losses, having acted with the knowledge of his superiors. They had turned a blind eye as long as he was making a profit, he said. He insisted that he was a scapegoat and that Société Générale had to take responsibility for his gambles.
Kerviel, a small-town boy from Brittany, did not profit personally from his unauthorised €50 billion of uncovered bets on futures markets in 2007 and 2008.
Convicted in October 2010 for breach of trust, forgery and entering false data into computers during the covert stock market deals, he has remained free pending the result of his appeal.
He changed his lawyer in March this year, hiring Koubbi, who accused the bank of manipulating secret recordings to make it appear that the trader's superiors were unaware of his activities.
Additional reporting by Reuters